What is a Market Order?
A market order is considered the most basic of all orders. It is meant to be executed as quickly as possible at the best asking or bid price depending if you want to sell or buy, for any asset. When you hit the ‘buy’ or ’sell’ button, the order will immediately execute at the best available price.
Essentially, the market order is taking the market price. Meaning you would take any price necessary to get or sell your assets.
When is a Market Order typically used?
A market ‘Buy’ order is usually executed when you want to enter the market right away and don’t want to wait around for a limit order to hit a certain price.
Market ‘Sell’ orders are usually executed when you want to exit the market as fast as possible. Reasons for this could be ‘bad’ news or if the price reaches unexpected levels.
The greatest advantage of a market order is that the order will be immediately filled if there is enough liquidity in the order book. A disadvantage of this however, is that you could end up paying for a higher price, or sell for a lower price. So, make sure to consider all the pros and cons of this order type before placing it.